Technical Guide
International logistics and foreign trade: the technical guide you need before importing or exporting
Incoterms, containers, pallets, trucks and how to calculate your cargo volume: everything you need to understand before moving goods between countries, explained in plain language for beginners.
Contents
- Incoterms for any mode of transport
- Incoterms for sea transport only
- How to choose the right Incoterm
- Container types and their capacity
- How to calculate your cargo's CBM
- Pallet types
- Truck types for road transport
- Foreign trade glossary
- Common mistakes when using Incoterms
- Frequently asked questions
Incoterms for any mode of transport
This group of 7 terms can be used with sea, air, land or multimodal transport. It's the group the ICC recommends for most operations, unless it's exclusively bulk sea cargo.
| Incoterm | Meaning | Risk transfer | Who pays main transport |
|---|---|---|---|
| EXW | Ex Works | At the seller's premises, goods not loaded | Buyer — from the seller's door |
| FCA | Free Carrier | When goods are handed to the carrier designated by the buyer | Buyer |
| CPT | Carriage Paid To | When handed to the first carrier | Seller — up to the agreed destination |
| CIP | Carriage and Insurance Paid To | When handed to the first carrier | Seller, including insurance with broad coverage (Clause A) |
| DAP | Delivered at Place | At the agreed destination, not unloaded | Seller — up to destination, not including unloading |
| DPU | Delivered at Place Unloaded | At destination, already unloaded | Seller — the only Incoterm where the seller unloads |
| DDP | Delivered Duty Paid | At destination, with all procedures and duties paid | Seller — even covers import duties |
EXW and DDP are the two extremes: under EXW the seller does the bare minimum (the buyer arranges everything from the factory), and under DDP the seller does the maximum (door-to-door delivery with import taxes paid). Most real operations fall somewhere in between.
Incoterms for sea transport only
These 4 terms are used exclusively when goods travel by sea or inland waterway, and the delivery point is a port. They don't apply to containerized cargo delivered at a terminal, where FCA is technically correct instead of FOB.
| Incoterm | Meaning | Risk transfer | Who pays main transport |
|---|---|---|---|
| FAS | Free Alongside Ship | When goods are placed alongside the vessel at the port of loading | Buyer — from alongside the vessel |
| FOB | Free on Board | When goods are loaded on board the vessel | Buyer — once goods are on board |
| CFR | Cost and Freight | When loaded on board (same as FOB) | Seller — pays freight to destination, but risk has already passed |
| CIF | Cost, Insurance and Freight | When loaded on board the vessel | Seller — freight and minimum insurance (Clause C) to destination |
A frequent nuance: under CFR and CIF, the seller pays freight to the destination port, but risk transfers much earlier — when the cargo is loaded onto the vessel at origin. If goods are damaged during sea transit, the claim belongs to the buyer, not the seller.
How to choose the right Incoterm for your operation
- If you're an importer just starting out: FCA tends to be the most reasonable starting point. The seller delivers goods ready for export, and you control international logistics from that point on — which generally gets you better freight rates if you already work with a trusted forwarder.
- If you want total cost predictability: DDP transfers all the work and risk to the seller, including import duties. It's convenient, but usually more expensive and gives you less control over tariff classification — which you or the supplier handle for you.
- If it's exclusively bulk sea cargo: then FOB or CIF, the terms specifically designed for that case, make sense.
- If the supplier insists on EXW: check that the price genuinely reflects that you're taking on all transport from their factory, including loading the truck — a point that often causes friction because the seller isn't obligated to load the vehicle.
In any case, the Incoterm choice directly affects the tax base used to calculate import duties (which is why the CIF value is the standard base in Paraguay), so it's worth deciding it together with whoever handles customs clearance, not in isolation with the supplier.
Sea container types and their real capacity
Most general cargo moves in two standard sizes (20 and 40 feet), with variants depending on the type of goods. These are industry reference measurements and capacities — they can vary slightly by container manufacturer.
| Type | Internal dimensions (approx.) | Capacity | Max cargo weight (approx.) | Typical use |
|---|---|---|---|---|
| 20' Standard (Dry Van) | 5.89 × 2.35 × 2.39 m | 33.2 m³ | 21,700 kg | General cargo, dense/heavy goods |
| 40' Standard (Dry Van) | 12.03 × 2.35 × 2.39 m | 67.6 m³ | 26,800 kg | Bulky general cargo, less dense |
| 40' High Cube | 12.03 × 2.35 × 2.70 m | 76.2 m³ | 26,500 kg | Bulky, light cargo (furniture, textiles) |
| Reefer (refrigerated) 20'/40' | somewhat less than equivalent Dry Van | 28–60 m³ depending on size | similar to Dry Van | Perishables, cold-chain products |
| Open Top | similar to Dry Van, no rigid roof | similar to Dry Van | similar to Dry Van | Cargo loaded from above with a crane (tall machinery) |
| Flat Rack | platform with no side walls | variable | up to ~40,000 kg depending on model | Oversized or very heavy cargo (machinery, pipes, vehicles) |
In practice, you rarely reach 100% of theoretical capacity: it's recommended to plan for 85% to 90% utilization to leave room for handling, stowage and securing the cargo.
How many pallets fit in each container? Using Euro pallets (1.2 × 0.8 m), a 20-foot container fits about 11 pallets in a single layer (up to double that if stacked in two levels), and a 40-foot one fits between 23 and 24 pallets in a single layer. With American/MERCOSUR pallets (1.2 × 1.0 m), those figures drop to roughly 10 and 20-21 pallets respectively, since each pallet takes up more floor space.
How to calculate your cargo's m³ (CBM)
The calculation is simple: multiply the three dimensions of each unit (in meters), then multiply that result by the number of identical units.
Practical example: a box measuring 0.50 m long × 0.40 m wide × 0.30 m high measures 0.06 m³. If the order is 200 identical boxes, the total cargo is 0.06 × 200 = 12 m³.
This number (the CBM, for "cubic meters") is what forwarders use to quote freight for LCL cargo (consolidated, not filling a full container), and it helps decide whether it's better to consolidate with other importers or book a full container (FCL) directly. As a general rule, from roughly 15 m³ onward it usually becomes more cost-effective to book a full 20-foot container instead of consolidated cargo, though the exact tipping point depends on current rates on each corridor.
Watch out for "volumetric weight": in air freight and some land legs, freight is charged based on whichever is higher between actual weight and volumetric weight (calculated from volume). It's worth asking your forwarder to clarify this before closing the quote.
Pallet types and why size matters
| Pallet type | Dimensions | Typical use |
|---|---|---|
| Euro pallet (EUR/EPAL) | 1.20 × 0.80 m | Standard in Europe; the most efficient for narrow containers |
| American / MERCOSUR pallet | 1.20 × 1.00 m | The most used in South America, including Paraguay |
| GMA pallet (standard American) | 1.22 × 1.02 m (48×40 inches) | Standard in the United States |
| Half pallet | 0.80 × 0.60 m | Small loads, pharmaceuticals, retail |
Beyond size, material matters: wood pallets crossing an international border must comply with the ISPM-15 phytosanitary standard (heat treatment or methyl bromide fumigation, certified with the official stamp on the wood). A wood pallet without that stamp can be rejected or held at the destination customs. Plastic pallets don't require this procedure, which is why many exporters prefer them to avoid delays.
Truck types for road transport
Once cargo arrives by sea or air, in Paraguay — a landlocked country — the final leg is almost always by road, typically from a port in Argentina, Brazil or Uruguay. The most commonly used units on MERCOSUR corridors are:
- Semi-trailer with container chassis: the most common unit for moving a full container (FCL) from the port to the importer's warehouse, without needing to deconsolidate the cargo.
- Curtain-side trailer: enclosed box with a sliding side curtain, allowing loading and unloading from the side with a forklift; widely used for general palletized cargo.
- Rigid box truck: fixed enclosed box, no side opening, for goods that need greater protection or security.
- Refrigerated truck/semi: with its own cooling unit, to maintain the cold chain on the land leg for perishable products.
- B-train (bitrén): a truck combined with two semi-trailers, authorized on specific Southern Cone routes, allowing more volume or weight to be transported in a single trip and reducing cost per ton on long distances.
- Flatbed: no sides or roof, for oversized cargo or machinery lifted by crane.
Foreign trade glossary worth knowing
- FOB value: the value of goods loaded onto the transport at origin, not including international freight or insurance.
- CIF value: FOB value + international freight + insurance. It's the standard base used to calculate import duties in Paraguay and most countries in the region.
- HS code / tariff classification: the 8-digit code (MERCOSUR Common Nomenclature) that classifies each product and determines its applicable duty. Incorrect classification is one of the most common causes of customs delays and fines.
- Certificate of origin: a document certifying the country where goods were manufactured, needed to access preferential tariffs under trade agreements like MERCOSUR.
- Bill of Lading (B/L): the sea transport document that functions as a contract, a cargo receipt, and, in its negotiable form, a title of ownership of the goods.
- Customs broker: the licensed professional who represents the importer or exporter before customs and handles clearance. It's mandatory in Paraguay for commercial operations.
- Temporary admission / maquila regime: special regimes allowing inputs to be imported with tax benefits when the final destination is re-export, widely used in export-oriented manufacturing.
- Forwarder / freight agent: the intermediary who coordinates international transport (sea, air or land) between origin and destination, consolidating cargo and negotiating rates with carriers or airlines.
Common mistakes when using Incoterms
- Using FOB for containerized cargo: technically incorrect and creates ambiguity about who bears the risk while the container waits at the terminal before loading onto the vessel. FCA is the correct term in that case.
- Not specifying the exact place: an Incoterm without the precise location ("FCA" alone, without an address or terminal) is a constant source of disputes. It should always be accompanied by the place: "FCA Shanghai Port", "DAP Asunción — buyer's warehouse".
- Confusing risk transfer with who pays freight: under CFR and CIF the seller pays freight, but risk already belongs to the buyer once cargo is loaded onto the vessel. These are two different things that don't coincide under several Incoterms.
- Not updating old contracts: contracts that still cite Incoterms 2010 (for example "DAT", which no longer exists, replaced by DPU) create legal confusion. It's worth reviewing and updating the reference to Incoterms® 2020.
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Get a free assessmentFrequently asked questions
What's the difference between Incoterms 2010 and 2020?
The main change was replacing DAT (Delivered at Terminal) with DPU (Delivered at Place Unloaded), which broadens the concept to any place, not just a terminal. The minimum insurance coverage required under CIP was also raised (now Clause A, broad coverage, previously Clause C), and an option was added for FCA to include a bill of lading with an "on board" notation when payment is by letter of credit.
Do Incoterms determine who pays import duties?
Yes, in most cases. Under every Incoterm except DDP, the buyer/importer pays the import duties and taxes in the destination country. Only under DDP does that obligation fall on the seller.
Which Incoterm is best for importing for the first time?
FCA tends to be a good starting point: it's clear, works with any mode of transport, and gives you control over international logistics without the operational complexity of EXW (where you have to arrange even the pickup at the supplier's factory).
Are Incoterms legally mandatory?
No. They're a private standard from the International Chamber of Commerce (ICC) that parties adopt voluntarily in the sales contract. Once agreed, they do have legally binding effects between buyer and seller.
What happens if the contract doesn't mention any Incoterm?
The operation is governed by whatever general conditions the parties agreed on or, failing that, by applicable law — which tends to be less clear and more prone to disputes over who bears the risk at each stage. That's why it's recommended to always specify the Incoterm and the exact place.
How many m³ does my cargo need to justify a full container?
There's no fixed number, but as a general reference, from roughly 15 m³ onward it usually becomes more cost-effective to book a full 20-foot container (FCL) than to pay for consolidated cargo (LCL), though the exact tipping point varies by current rates on each corridor and shipment urgency.
Do wood pallets have any special requirement for exporting?
Yes. Any wood pallet crossing an international border must comply with the ISPM-15 phytosanitary standard (heat treatment or fumigation, certified with an official stamp on the wood). Without that stamp, destination customs can hold or reject the shipment. Plastic pallets avoid this procedure.
This guide is for general informational purposes about the Incoterms® 2020 rules published by the International Chamber of Commerce (ICC), and about common shipping-industry standards for containers and pallets, and does not constitute legal, customs or logistics advice. Container capacities can vary slightly by manufacturer and shipping line. Every foreign trade operation has particularities worth validating with a customs broker or forwarder before defining the Incoterm, container type or mode of transport to use. Sources consulted: ICC publications on Incoterms® 2020 and ISO technical standards for the sea container industry, reviewed in July 2026.